It has been a relatively slow start to the week in the terms of data as we build up towards the Easter break, however, that has not stopped sterling losing over a point against the dollar since trading opened on Monday. Pound/dollar exchange rates have dropped from the recent high of $1.5250 to its current level of $1.5137. In today's post I will take a look at what has caused the decline and what is in store for the rest of the week.
Despite some poor U.S data today sterling lost ground against the greenback, as we have seen before negative data can actually strengthen the dollar as the currency is seen as a safe-haven. Consumer confidence came in much lower than forecast with data released by the Confidence Board showing figures were nearly 8 points lower than expected. The data captures the level of confidence that people have in the U.S economy and tends to cause some swings in the strength of the dollar.
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Coupled with the ongoing issues in Cyprus and the proposed bailout, safe-haven flows into the dollar seem to be on the up as appetite for the euro seems to be weakening. Once the terms of the bailout have been agreed it is possible the flows will dry up and we could see sterling/dollar profit like we saw when bailouts for Spain and Greece were put in place.
Tomorrow could also see some movements with exchange rates as we await the final GDP reading from Q4 2013. If the figures are revised down from the current reading of -0.3% we could see sterling weaken dramatically and lose the gains made against the dollar in the last couple of weeks.
With so much uncertainty surrounding the UK economy and euro-zone at the moment it is almost impossible to try and predicted which way the FOREX markets will move in the next couple of months. At lot will depend on whether the UK falls back into recession and how the BoE will react if that is the case. If we somehow manage to avoid the triple-dip it will lend some much needed support to the pound and could push sterling's value up against a number of currencies.
If you have a requirement to buy or sell dollars in the coming weeks leaving it to chance could be very costly. With a range of contracts at my disposal I can help you make the most of your currency transfer. If you are a business or private individual and would like to know more about the options available use the link below and complete the contact form for a free, no obligation consultation.
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